Inside Google

SAN FRANCISCO (MarketWatch) — Legislation proposed in California that would mandate a means for Web users to easily prevent websites from gathering their personal information is moving forward, despite intensive lobbying and opposition from some of the state’s largest Internet firms — including Facebook Inc. and Google Inc.

The so-called Do Not Track Internet privacy legislation introduced by California State Senator Alan Lowenthal would require Internet companies to give users a way to comprehensively opt out of having information, such as their name or location, collected online. Companies that fail to comply could face civil legal action, according to the bill.

Large Internet firms have generally bristled at the notion of regulating their collection of user data, which helps target online advertising. Companies argue that policing their own, collective privacy policies makes more sense than passing legislation. An Internet privacy bill proposed recently at the federal level does not include a specific Do Not Track provision.

California’s State Senate Judiciary Committee voted on Tuesday to move Lowenthal’s Do Not Track bill forward to the Appropriations Committee. Lowenthal said during the committee hearing that his legislation “is consistent with California’s long history of championing privacy issues.”

However, Fred Main, a representative of TechNet, a policy group representing technology companies, countered during the hearing that by stifling the Internet firms that spur much of the economic growth in the state, the bill would be “the equivalent of Texas stopping the oil industry.”

Facebook, Google and other Internet firms have lobbied California lawmakers this year on Sen. Lowenthal’s proposed Do Not Track legislation, according to public filings.

In a letter sent last week to Sen. Lowenthal, Facebook, Google, Yahoo Inc. and a number of other firms wrote that his proposed legislation would create unnecessary confusion and would add significant new costs for cash-strapped regulators.

“The measure would negatively affect consumers who have come to expect rich content and free services through the Internet, and would make them more vulnerable to security threats,” the companies wrote in the letter, reviewed by MarketWatch.

“It would prove costly to the state and cumbersome for the Attorney General to figure out how to regulate under the bill and to enforce the law,” the letter said.

Representatives from Facebook and Google declined to comment.

Others signing the letter to Sen. Lowenthal included TechNet, which counts Facebook, Google, Microsoft Corp., Apple Inc. and many other firms as members.

They were joined by other organizations and firms including the Motion Picture Association of America, the California Retailers Association and insurer Allstate Corp.

In the letter, the firms argue that the Network Advertising Initiative, a self-policing organization for the online advertising industry, already provides “easy-to-use mechanisms to opt out of interest-based advertising from more than 60 companies.”

Google unveiled a tool for its Chrome Internet browser earlier this year that enables users to opt out of tracking, while Microsoft has added similar technology to its Internet Explorer browser.

During the State Senate Judiciary Committee hearing on Tuesday, Sen. Lowenthal acknowledged the new privacy tools offered by individual firms, but added that “the mechanism is often not simple, or user-friendly.”

Jeff Chester, a privacy advocate and executive director of the Center for Digital Democracy, said that strong Do Not Track legislation has made little progress in Washington, D.C. — making a focus on state bills necessary.

“The online ad lobby has convinced Washington that Do Not Track will kill off the Internet economy,” Chester said. “We think there’s a real role now for states to come in, and regulate the profiling going on within their borders.”

Chester said that if California does not ultimately pass Sen. Lowenthal’s Do Not Track bill, he and others may push for a related ballot initiative in the state.

Sen. Lowenthal’s bill is sponsored by Consumer Watchdog, a non-profit group that has been funded to publicly challenge Google’s privacy policies and government lobbying.

In their letter to Sen. Lowenthal opposing his legislation, Google and others say that the Internet sector employs roughly 162,000 people in California, and is “the fastest growing source of jobs in the

state.”

The Do Not Track Bill “would create a second, conflicting set of standards to which companies would have to conform or else face class-action lawsuits,” the companies argue. “This would, in turn, create significant confusion and uncertainty for investors, businesses and consumers.”

Chester said it’s natural that Internet firms, which rely on serving relevant advertising to a growing number of users, would challenge Sen. Lowenthal’s Do Not Track bill, as “they have the most to lose.”

“We now have new poster children for the California Do Not Track campaign, Sergey Brin and Mark Zuckerberg,” Chester said, in reference to founders of Google and Facebook.